Investment Strategy
We seek to pick winning funds with superior management and quantitative characteristics linked to strong performance. Our quantitative research uses the most comprehensive mutual fund database in the world to determine the best strategies for long-term investing success. We then supplement those studies with extensive qualitative research of portfolio managers, analysts, and traders through onsite visits and follow-up phone calls.
 
About the Editor
Russel Kinnel is director of manager research for Morningstar, Inc. and editor of Morningstar FundInvestor, a monthly print newsletter for individual investors. He also writes the Fund Spy column for Morningstar.com, the company's investment Web site.

Since joining the company in 1994, Kinnel has covered the Fidelity, Janus, T. Rowe Price, and Vanguard mutual fund families. He helped develop the new Morningstar Rating for funds and the new Morningstar Style Box methodology. He also is co-author of the company's first book, The Morningstar Guide to Mutual Funds: 5-Star Strategies for Success, which was published in January 2003.

 
 
Feb 24, 2018
Welcome !
Find Fund Report
Please input a ticker or fund name.
 
About Russel Russ' Photo
Russel Kinnel,
Director of Manager Research and Editor, Morningstar FundInvestor
Russel Kinnel is director of manager research for Morningstar, Inc. and editor of Morningstar FundInvestor, a monthly print newsletter for individual investors.
Featured Posts
Taking Stock After a Correction
It's officially a correction. Stocks have fallen 10% from their highs, though if the decline stops there it's really just a market blip. It's not easy to say exactly what the causes are, but certainly signs of rising inflation and expectations that the Fed will keep raising interest rates has had something to do with it.

I thought I'd take a look at year-to-date returns in the Morningstar 500 to get a handle on areas of strength and weakness in the markets. Of course, I wouldn't read anything about a manager's skill based on a few weeks of returns, but this does give some insight as to what's going on in the markets. All the returns quoted below are through Thursday, Feb. 8.

Hardest hit are real-estate funds. That makes sense as REITs are yield plays and therefore pretty sensitive to changes in interest rates. Vanguard REIT Index VGSLX is off 12.8%, and T. Rowe Price Real Estate TRREX is down 12.4%.

Utilities are sensitive to interest rates for the same reason, so no surprise that Franklin Utilities FKUTX is down 9.7%. Natural resources are also under pressure. Fidelity Select Energy FSENX is down 9.4%, and Vanguard Precious Metals and Mining VGPMX is down 9.1%.

Long bonds are, of course, the spot in the bond market that most often gets hurt by rising rates, and you can see that in the 6.2% loss of Vanguard Long-Term Treasury VUSTX.  The losses for intermediate-term bond funds are more muted, however. Vanguard Total Bond Market Index VBTLX is down 1.8%, and PIMCO Total Return PTTRX is down 1.5%.

Much like last year, small value is the worst spot in the Morningstar Style Box. Janus Henderson Small Cap Value JSCVX is off 6.3%, and Harbor Small Cap Value HASCX is down 5.8%.

So what's done well? Large growth and funds with foreign currency are near the top. Morgan Stanley Institutional Growth MSEGX is up 2.9%, and mid-growth stalwart Primecap Odyssey Aggressive Growth POAGX is up 1.0%.

PIMCO Emerging Local Bond PELBX is up 2.7%, T. Rowe Price International Bond RPIBX is up 2.2%, and PIMCO Foreign Bond (Unhedged) PFBDX is up 1.9%.

Bank-loan funds are doing well because bank loans adjust their interest rates with the markets. Eaton Vance Floating Rate EVBLX and Fidelity Floating Rate High Income FFRHX are both up about 0.8%.

The falling dollar has also helped foreign-equity funds to lose less than their U.S. peers. Oakmark International OAKIX is down 0.4%, and Vanguard Emerging Markets Index VEMAX is down 0.4%.

One Fund Got Crushed
It isn't in the Morningstar 500, but LJM Preservation and Growth LJMIX has jaws dropping in the fund industry with a massive decline this week. The fund has fallen 81% because it was aggressively shorting volatility. The firm hasn't commented since the decline, so we don't know exactly what happened, but it appears to have been a big short position followed by a margin call that crushed the fund.

In short, it appears LJM was picking up quarters on train tracks. That is, it was taking very big risks just for a small boost in income.

Also worrisome is that it was a day late in posting its closing net asset value from Monday and Tuesday's close.

I suppose an additional lesson is that there's a big risk in reading too much into an instrument with a short history, as VIX has only been around about a decade.

 

Customer Support

Product Support


Inquiries regarding your subscription such as address changes, missing/damaged issues, etc.
Phone: 1-800-957-6021 | Mon-Fri 8:30AM-5:00PM

Inquiries regarding technical issues such as logging in or downloading
Phone: 1-312-424-4288 | Mon-Fri 8AM-6PM
Email: newslettersupport@morningstar.com

 

Product Sales


Inquiries regarding your subscription renewal, billing or to learn about other Morningstar investment publications and resources
Phone: 1-866-608-9570 | Mon-Fri 8AM-5PM
Email: ussales@morningstar.com